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Unit 2

Unit 2. Strategic Marketing Planning. What is Strategic Planning?.

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Unit 2

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  1. Unit 2 Strategic Marketing Planning

  2. What is Strategic Planning? • It is the managerial process that helps to develop a strategic and viable fit between the firm’s objectives, skills, resources with the market opportunities available. It helps the firm deliver its targeted profits and growth through its businesses and products.

  3. Steps in Strategic Planning . Business unit, product and market level Setting company objectives and goals Planning Marketing & Other functional strategies Defining the Company Mission Designing the Business Portfolio

  4. Organization Values, Mission, Vision and Ethics Values :comes from our upbinging (Sanskara). There are Intrinsic & Extrinsic values. We better know good n bad values. What is good in India may be bad in UK. So values are subjective in nature. Corporate vision: is a short, succinct, and inspiring statement of what the organization intends to become and to achieve at some point in the future, often stated in competitive terms. Vision refers to the category of intentions that are broad, all-inclusive and forward-thinking. It is the image that a business must have of its goals before it sets out to reach them. It describes aspirations for the future, without specifying the means that will be used to achieve those desired ends.

  5. Vision & Mission- Infosys Infosys' Vision: "To be a globally respected corporation that provides best-of-breed business solutions, leveraging technology, delivered by best-in-class people." Infosys' Mission Statement : "To achieve our objectives in an environment of fairness, honesty, and courtesy towards our clients, employees, vendors and society at large."

  6. Vision and Mission of Infosys (China) Vision Infosys Technologies (China) Company Limited will be the best in class provider of business solutions to Global 2000 companies and large North Asian corporations by leveraging technology and talent base of China. MissionSource of pride for our employees and a partner of choice for our clients.

  7. Vision & Mission of Wipro Having already achieved the pinnacles of process and quality credentials (through ISO 9000, SEI CMM, PCMM and Six Sigma), Wipro's Vision is focused on attaining leadership in the areas of business, customer and people. • Business Leadership: Among the top 10 Information Technology Services companies globally and the No.1 Information Technology company in India. • Customer Leadership : The No.1 choice of customers through innovative solutions and Six Sigma processes. • People Leadership : Among the top 10 most preferred employers globally by creating an environment of empowerment, intellectual challenge and wealth sharing. • Brand Leadership : Wipro to be among the 5 most admired brand in India.

  8. Tata Steel - Mission • Consistent with the vision and values of the founder Jamsetji Tata, Tata Steel strives to strengthen India s industrial base through the effective utilisation of staff and materials. The means envisaged to achieve this are high technology and productivity, consistent with modern management practices. • Tata Steel recognises that while honesty and integrity are the essential ingredients of a strong and stable enterprise, profitability provides the main spark for economic activity. • Overall, the Company seeks to scale the heights of excellence in all that it does in an atmosphere free from fear, and thereby reaffirms its faith in democratic values.

  9. Tata Steel – Vision -2007 • To seize the opportunities of tomorrow and create a future that will make us an EVA positive companyEVA = (RONA – WACC) X Invested Capital • To continue to improve the quality of life of our employees and the communities we serve. • Revitalize the core business for a sustainable future: • Venture into new businesses that will own a share of our future • Uphold the spirit and values of TATAs towards nation building

  10. Corporate Mission • This seeks to embody the entire goals of the organization and the objective of its existence. • It seeks to provide a sense of purpose, direction and opportunity

  11. Market Oriented Business Definitions Company Product Oriented Market Oriented Revlon We make cosmetics We sell lifestyle & self expression, success and status, memories, hopes and dreams. Disney We run theme parks We provide fantasies & entertainment- a place where America still works the way it’s supposed to Wal-Mart We run discount stores We offer products and services that deliver value to Middle Americans

  12. Good mission statements have three characteristics • They focus on a limited number of goals • It stresses the major values and policies the firm desires • It defines the major competitive scope of operation

  13. Setting the Company objectives 5 questions that the firm must ask itself • What is our business? • Who is our customer? • What does our customer need? • What will our business be? • What should our business be?

  14. Marketing Myopia • Industry is a customer satisfying process not a goods producing process. • It is important therefore how you redefine your business.

  15. Designing the Business Portfolio Analyzing the Current Portfolio SBU • It is a company within a company • The business is differentiated from the rest of the company • It has its own set of competitors • It is a separate profit centre

  16. Product portfolio analysis • Brings all your PLCs together • Helps set broad strategic objectives (Build, Hold, Harvest or Divest) • Checks for balanced portfolio • Allows comparison of ‘strengths’ v. competitors • Guides flow of resources • A simple and effective presentational method

  17. The Boston Consultancy Group Matrix A 50% Question Marks ? C 15% High Stars Market Growth Rate Cash Cows Dogs B 25% Low D 10% High Low Relative Market Share

  18. Cash Flows Across Businesses in the BCG Portfolio Model Question marks Stars High Cash Flows Growth rate (cash use) Low Dogs Cash cows High Low Relative market share Desired direction of business development

  19. SBU Strategy SBU Profile Regd Investment Net Cash inflow HIGH HIGH -- or + HOLD/INCREASE STAR HIGH + LOW HOLD HIGH CASH COW High – or + 0 or -- Very high or Divest QUESTION MARK Increase/Divest + Disinvest Harvest/Divest Low or -- DOG

  20. The case of anunbalanced portfolio High Market growth rate Low Market share High Low

  21. Plotting BCG Matrix SBU Sales this year Relative Market share =------------------------------------ Leading Rival sales this year Ind. sales this yr – Ind. Sales last yr Market Growth Rate = ------------------------------------- Industry sales last year SBU Relative Contribution = Circumference = ∏d SBU’s Total sales in which d = -------------------------------- Corporation Total Sales

  22. Industry attractiveness High Medium Low 1 1 2 High Business’s competitive position 1 2 3 Medium 2 3 3 Low The GE Nine-Cell Matrix 1 Invest/grow 2 Selective investment/ maintain position 3 Harvest/divest

  23. Market Attractiveness (External) • Market size- Market growth rate- Market profitability - Pricing trends - Competitive intensity / rivalry - Overall risk of returns in the industry • - Entry barriers - Opportunity to differentiate products and services • - Demand variability- Segmentation - Distribution structure • - Technology development

  24. Competitive Strength (Internal) • - Strength of assets and competencies- Relative brand strength (marketing)- Market share • - Market share growth- Customer loyalty- Relative cost position (cost structure compared with competitors) • - Relative profit margins (compared to competitors)- Distribution strength and production capacity- Record of technological or other innovation • - Quality- Access to financial and other investment resources • - Management strength

  25. Factors underlying Market Attractiveness and Competitive Position in GE Multifactor Portfolio Model: Hydraulic-Pumps Market

  26. Factors Influencing Company Marketing Strategy(PEST)

  27. Ansoff • Ansoff says there are four strategies for growing a business. • Let’s consider their merits and drawbacks.

  28. Product New Existing Market Penetration New Product Development Existing And there is a 5th Option: Increase Productivity Market Market Extension Diversification New Ansoff Growth Matrix….

  29. Alternative Corporate Growth Strategies Current products New products • Market penetration strategies • Increase market share • Increase product usage • Increase frequency of use • Increase quantity used • New applications • Product development strategies • Product improvements • Product-line extensions • New products for same • market Current markets • Diversification strategies • Vertical integration • Forward/backward integration • Diversification into related bus (concentric diversification) • Diversification into unrelated businesses (conglomerate diversification) • Market development strategies • Expand markets for existing products • Geographic expansion • Target new segments New markets

  30. …helps fill the Strategic Planning Gap Targeted sales Diversification 4 Strategic planning gap 3 New Markets 2 New Products Sales 1 Market penetration Do nothing scenario 0 1 2 Time (years)

  31. Factors Affecting the Creation of Shareholder Value Creating shareholder value • Shareholder return • Dividends • Capital gains Corporate objective Valuation components Cash flow from operations Discount rate Debt • Sales growth • Operating profit margin • Income tax rate • Working capital investment • Fixed capital investment • Value growth duration • Cost of capital Value drivers Management decisions Operating Investment Financing 2-11

  32. The Generic Value Chain

  33. SWOT Analysis • Strengths • Weaknesses • Opportunities • Threats

  34. Opportunity and Threat Matrices

  35. The Planning Process • Analysing Market opportunities • Developing Marketing strategies • Planning Marketing Programs • Managing the Marketing Effort

  36. Using 5 Forces analysis to scan the “MICRO” environment New Entrants Threat of New Entrants Bargaining Power of Buyers Bargaining Power of Suppliers Industry Competitors Buyers Suppliers Intensity of Rivalry Threat of Substitutes Substitutes

  37. 5 Forces example: BT Cellnet MM02(phones) Weak Cost of licence High barrier to entry Huge cost to 3G New functions? Weak Nokia Motorola Ericsson Competing strongly For share of Mature market Strong Customers have many competing offers, some including airtime, some not. Cheap deals through Internet Strong Vodaphone Orange One-to-one Medium Customers returning to land lines Convergence with PDAs Location technology

  38. Porter’s Generic Strategies • Overall cost leadership • Product Differentiator • Focus

  39. Marketing Control • Annual Plan control • Profitability control • Strategic Control

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